Featuring savory patties with crispy lettuce, fresh tomatoes, and original sauces, MOS Burger provides customers with quality burgers, all made to order.
Over the last ten years, Japanese food exports have reached record levels, crossing JPY 1.45 trillion just last year. This is being reflected in the growth of Japanese food culture abroad. In the last ten years, the number of Japanese restaurants abroad has tripled, from 55,000 to over 200,000 today. How do you account for these record food export levels and the growth in popularity of Japanese cuisine worldwide?
I believe the main reason washoku has become so popular is that the food is healthy and delicious.
The Japanese government has set targets to push these exports even further by trying to reach over JPY 5 trillion by the end of the decade. To do this, they are pivoting to a more global approach, with new initiatives, such as the Global Foodstuffs Initiative, to bolster the marketing capabilities of Japanese firms abroad. Do you think this JPY 5 trillion level is achievable in this timeframe, and if so, what opportunities do you think it provides Japanese companies?
It’s hard to tell if it’s feasible, but the government's strong initiative in achieving this target is a very important move. At MOS FOOD SERVICES, we would like to do our best to move in the same direction and achieve a high expansion target.
As a company founded in Japan, you have incorporated Japanese food innovations into your menu, including your Rice Burger, Teriyaki Burger and the MOS Natsumi Burger, which uses lettuce wraps instead of buns. Of course, as a company that is not only active in Japan but also overseas, you have to be mindful of local taste preferences in the different markets in which you operate and try to accommodate those. To what extent do you need to adjust your menu in your overseas markets, and what is your research process for identifying and targeting these local tastes?
When we develop products for local markets, we work in a tight-knit relationship with locals. We listen and try to grasp the local palate and preferences to create a delicious menu. In fact, delicious is the keyword for MOS BURGER, so developing delicious products is our fundamental goal.
You have over 1,700 stores around the world, and about 80% of these operate under a franchise model. This model generates revenue from both the wholesale ingredients and the royalties from franchisees. What are the benefits of this franchise model over directly managed stores in unlocking new markets, especially overseas?
Our overseas strategy is to partner with local leading companies. We have joint ventures with local companies, and those companies operate MOS BURGER stores locally. There are a few exceptions, with a few franchises overseas, but the dominant model is shops run by either a joint venture or MOS FOOD SERVICES.
As for franchises, the advantage is that the stores can be tightly connected to the local area. We have a very different franchise system from others. Usually, a franchise system has a head office at the top, and the outlet locations have franchise contracts. It’s a vertical system. But in Japan, MOS FOOD SERVICES uses a system where the head office is the center, and the outlets surround that, and they can communicate with each other. It’s more like a network, so it’s a horizontal system, not a vertical one. The head office and franchisee outlets learn together and connect. We call it kyoueikai, which means something like a mutual prosperity committee. It’s the franchisee and franchisor working together to achieve success, and there are two kinds of committees. One is a Campaign Promotion Committee, which is engaged in sales promotion activities to ensure the success of the new nationwide product campaign, as well as community-based activities. In previous years, the committee members have provided recommended local menus using locally sourced ingredients, and we use that local menu as a campaign. The second committee is called HDC Education Committee, which refers to hospitality, deliciousness, and cleanliness. It considers how to manage the restaurants best, and they share that knowledge with everyone. They also are active in contributing to the local communities. This kyoueikai is very interesting. Of course, I’m the president of MOS FOOD SERVICES, and I am also the honorary chairman of the kyoueikai.
Could you give us an example of the variation in the menus according to region in Japan?
Chicken Nanban Burger
Chicken Nanban is a famous food for people in Miyazaki prefecture, Kyushu, where I was once the sales manager. One franchisee in that area recommended I make a chicken Nanban burger, so we probably did that twenty years ago. It was a very nice burger. It was popular in Kyushu, so I changed the menu a little and introduced it. Then it became very popular throughout Japan, however, it is no longer available.
Happiness through food is a core part of your management structure and is the MOS philosophy that guides your management. You have launched The Medium-Term Management Plan that is due to end in FY2024. As part of this, the goals included strengthening your domestic service, continuing your overseas expansion, and developing your human resource capabilities. Coming to the end of this plan, what strategies did you implement to achieve these goals, and are you on track to achieve them?
To elevate domestic service quality, we have introduced a digital ordering method. For example, you can order at the table by scanning a QR code with your smartphone or via a digital kiosk. We have also increased the speed of food preparation by upgrading the kitchen and facilities to be more functional and efficient. Thanks to these efforts, we have increased average monthly sales per store by 9% compared to the last mid-term plan.
For our overseas expansion, we are analyzing whether our stores in each market are profitable. If they are not, we will close them and find another spot with a higher chance of profitability.
The third aspect of our plan, human resources, is what we emphasize most, and we have reformed the headquarters training structure. We created a career design guidebook so the staff can understand what kind of knowledge they need to acquire to do the work that they want to do. We are also actively recruiting mid-career workers. We also have a program offered to Vietnamese people called “Vietnam Kazoku”, which means family in Japanese, where we provide tuition for them to study for one year at their local university and invite them to Japan so they can work at MOS BURGER. We already have 36 people working via this program. The name of the program is meant to convey that we are not recruiting because of a shortage of manpower but rather because we are all part of the same Asian family. Therefore, we want to work together like good family members. Through their training and experience, we will find individuals who can become store managers and work at the management level of the company.
We also started a program two or three years ago where we sent our Japanese staff to International University of Japan in Niigata to study for a one-year MBA course. This is coupled with our overseas intern program, where we send our staff to an Asian country. These efforts illustrate how we are stressing the importance of elevating the capabilities and diversifying the backgrounds of our staff.
You mentioned the importance of partnerships overseas. You operate over 430 stores abroad, and you are particularly active in Taiwan, Hong Kong and Singapore. You also mentioned that your model for this is to seek joint ventures locally. Are there any particular markets you plan to expand into, and if so, are you looking for new partners in these markets?
We are currently focusing on our existing partners and the countries that we already operate in, so we are holding back from entering new markets. Pre-COVID, we planned to start in Vietnam, but we have since halted those plans. COVID has significantly changed the situation, so we’re focusing on our existing stores to enhance profitability and efficiency. In the future, we are interested in the US and Europe as new markets.
COVID-19 had a massive impact on the service industry as a whole, not just food. Brick-and-mortar stores almost completely shut down, and many businesses moved to an e-commerce model. For food services like your business, you can do pickup and delivery, which have grown exponentially in recent years. What changes have you implemented in your business model since COVID-19, and what lessons did you learn?
When I said that COVID greatly impacted our business, I was referring especially to overseas business. The market has shifted somehow, and we see a change in the environment surrounding us in foreign markets. As for the domestic Japanese market, we did not have much impact from COVID since we already had diverse sales channels, including takeaway and drive-thru, so we were able to overcome COVID without having a big hit.
Pre-COVID, we had already established a diversified style of stores, including a building style, a drive-thru style, and a food court style. At the same time, there was location diversity in business, commercial, and residential districts, so we covered all the market areas. Thus, we did not suffer a hard hit during COVID.
It’s not because of COVID, but we did already think that e-commerce business would be an important thing, and we are now using e-commerce to sell our merchandise. For example, we have a rice burger shop where you can choose many kinds of rice burgers and have them delivered via a partnership with Yamato. We couldn’t sell that many kinds of rice burgers in the restaurants.
Tofu and soy have long been part of Japanese cuisine, but they have only recently been caught on in Western markets as meat-free alternatives. As part of your menu changes, you’ve also introduced your Green Burger. What we’re seeing now that’s interesting in the Japanese market, in particular, is some reluctance to switch to meat-free alternatives. Do you think menu initiatives such as your Green Burger can overcome the reluctance of Japanese consumers to choose meat alternatives, or do you think other changes need to be made in the future?
The purpose of developing this Green Burger is to diversify our product offerings and offer more options to those who do not eat meat, as well as, for sustainability purposes, to reduce CO2. Whether it’s an alternative meat or not, deliciousness is the fundamental factor that needs to be accomplished, so rather than the staff first explaining to customers that it is a meat-free alternative, it’s better to let the customers try it and experience its deliciousness, then give a thorough explanation.
We are introducing a variety of options, so one day, a person can be more health conscious and decide to eat the lettuce burger and one day not have a meat patty but have a soy patty using soy-derived vegetable protein. To be honest, a soy patty burger is not a profit-making product, but it is an integral part of strengthening our product offerings.
Green Burger
Turning from plant-based burgers to the more traditional meat-based burgers, we’ve seen disruptions to the supply chain, particularly around US beef. There have been some changes in the export price. The weakness of the yen drives this, but also, within the US domestic beef market, there have been rising cattle prices. As a result, producers have been limiting slaughters and the amount of beef available in the international export market. Japan’s reliance on this imported beef means these rising costs are being starkly felt. For your company, how are you maintaining the affordability of your products given this fluctuation, and are you putting any strategies in place to mitigate these disruptions to your supply chain?
We mainly import beef from Australia and New Zealand, and we only use US beef for the rice burger. We also work with two manufacturers for the beef patty.
You are collaborating with the new Minions movie and partnering with Mister Donut. What role do these partnerships play in your business, and do you have any new ones you could tell us about?
The biggest partnership is the one with Mister Donut, but we have smaller partnerships and collaborations with snack or drink companies and also apparel companies. Food-related collaborations are the most successful, but T-shirts and miscellaneous goods are also popular.
As you mentioned, you are primarily focusing on the Asian market. In recent years, you’ve opened a number of stores in Taiwan. Could you tell us which countries in Asia, beyond Japan, you’re currently focused on for your mid-term strategy?
We currently focus on Taiwan, where we have 300 stores. Other countries include Singapore, Hong Kong, Thailand, the Philippines, and Korea. We already have stores in these areas and want to strengthen them. In the future, Vietnam is within our scope.
If we were to come back to interview you again on the 60th anniversary of MOS FOOD SERVICES in 2032, what would you like to achieve by then?
When I was made president, I said I wanted to be Ichiro in hamburgers. Baseball came to Japan from the US and is now very popular, and in Japan, Ichiro is a superstar. He’s a very good baseball player. He hits a lot, he runs fast, and he is a good fielder. He does everything. He is a very balanced baseball player, not a home run specialist. The hamburger was also born in the United States and came to Japan. Our founder discovered hamburgers in the United States, adopted them, and changed the taste and the quality for Japanese people. I’m very happy to say that MOS BURGER has the most delicious hamburger in Japan, so I want to challenge MOS BURGER to become the most delicious hamburger in the United States or the world. That is my dream, so I want to try things to make it happen.
For more information, visit their website at: https://www.mos.co.jp/global/
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